Associated Banc-Corp Reports Second Quarter Earnings of $0.50 Per Common Share, or $0.53 Per Common Share Excluding $7 million in Acquisition Related Costs(1)

Earnings per share up 39% from the prior year

GREEN BAY, Wis., July 19, 2018 /PRNewswire/ -- Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported net income available to common equity ("earnings") of $87 million, or $0.50 per common share for the quarter ended June 30, 2018. This compares to net income available to common equity of $56 million, or $0.36 per common share for the quarter ended June 30, 2017.

"In June, we welcomed over 92,000 Bank Mutual customers to Associated Bank. We re-branded 22 Bank Mutual branches and expanded Associated Bank's network into 12 new communities. We look forward to demonstrating to our new customers the greater range of services that Associated offers," said President and CEO Philip B. Flynn. "We are also pleased with the strong bottom line results this quarter. We had solid growth in our commercial and business lending portfolios. We benefited from rising rates and a credit environment that remains benign, enabling us to take a very modest provision for credit loss in the quarter."

SECOND QUARTER 2018 SUMMARY (all comparisons to the second quarter of 2017)

Average loans of $23.0 billion were up 12%, or $2.5 billion

Average deposits of $23.6 billion were up 10%, or $2.1 billion

Net interest income of $226 million increased $43 million, or 23%

Net interest margin of 3.02% improved 19 basis points from 2.83%

Provision for credit losses was $4 million, down from $12 million

Noninterest income of $93 million was up $10 million, or 13%

Noninterest expense of $211 million was up $35 million and included $7 million of acquisition related costs

Income before income taxes was up 33%, or $26 million

During the quarter, the Company repurchased approximately 250,000 shares, or $7 million, of common stock

Total dividends paid per common share were $0.15, up 25%

1This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide greater understanding of ongoing operations and enhance comparability of results with prior periods. See page 10 of the attached tables for a reconciliation of GAAP financial measures to non-GAAP financial measures which exclude acquisition related costs.

Loans

Second quarter 2018 average loans of $23.0 billion were up 12%, or $2.5 billion from the second quarter of 2017, and were up $0.9 billion from the first quarter of 2018.

With respect to second quarter 2018 average balances by loan category:

Consumer lending increased $1.4 billion from the year ago quarter, and grew $237 million from the first quarter of 2018 to $9.6 billion.

Commercial real estate lending increased $742 million from the second quarter of 2017 and increased $306 million from the first quarter of 2018 to $5.7 billion.

Commercial and business lending increased $376 million from the year ago quarter and increased $383 million from the first quarter of 2018 to $7.7 billion. C&I loan growth was spread across most specialized lines of business and in the general commercial portfolio.

Deposits

Second quarter 2018 average deposits of $23.6 billion were up $2.1 billion, or 10% from the year ago quarter, and were flat compared to the first quarter of 2018.

With respect to second quarter 2018 average balances by deposit category:

Money market deposits increased $1.1 billion from the year ago quarter, but decreased $25 million from the first quarter of 2018 to $7.2 billion.

Interest-bearing demand deposits increased $911 million from the year ago quarter and increased $232 million from the first quarter of 2018 to $4.7 billion.

Time deposits increased $813 million from the year ago quarter, but decreased $150 million from the first quarter of 2018 to $2.6 billion.

Noninterest-bearing demand deposits increased $240 million from the year ago quarter and increased $47 million from the first quarter of 2018 to $5.1 billion.

Savings increased $352 million from the year ago quarter and increased $170 million from the first quarter of 2018 to $1.9 billion.

Network transaction deposits decreased $1.2 billion from the year ago quarter and decreased $278 million from the first quarter of 2018 to $2.1 billion.

Net Interest Income and Net Interest Margin

Second quarter 2018 net interest income of $226 million was up 23%, or $43 million from the year ago quarter, with net interest margin increasing 19 basis points to 3.02%. Second quarter 2018 net interest income increased 8%, or $16 million from the first quarter of 2018.

The average yield on total commercial loans for the second quarter of 2018 increased 106 basis points to 4.75% from the year ago quarter and increased 41 basis points from the prior quarter.

The average cost of total interest-bearing deposits for the second quarter of 2018 increased 32 basis points to 0.83% from the year ago quarter and increased 10 basis points from the prior quarter.

The net free funds benefit, the benefit of holding noninterest-bearing demand deposits, increased 8 basis points in the second quarter of 2018 compared to the year ago quarter and increased 4 basis points from the prior quarter.

Noninterest Income

Second quarter 2018 total noninterest income of $93 million increased $10 million from the year ago quarter and increased $2 million from the prior quarter.

With respect to second quarter 2018 noninterest income line items:

Insurance commissions and fees were up $3 million from the year ago quarter, driven by the acquisitions of Diversified Insurance Solutions and Anderson Insurance, and were up $1 million from the prior quarter on seasonal strength of the employee benefits business.

Card-based and loan fees were up $1 million from both the year ago quarter and the prior quarter.

Noninterest Expense

Second quarter 2018 total noninterest expense of $211 million increased 20%, or $35 million from the year ago quarter, but decreased $2 million from the first quarter of 2018. Second quarter 2018 noninterest expense includes $7 million of Bank Mutual acquisition related costs.

With respect to second quarter 2018 noninterest expense line items:

Personnel expense increased $17 million from the year ago quarter, and increased by $6 million from the first quarter of 2018, primarily driven by the additional cost of Bank Mutual staff.

Technology expense increased $4 million from the year ago quarter, and increased by $2 million from the prior quarter, largely driven by the additional cost of Bank Mutual operations.

Occupancy expense increased $2 million from the year ago quarter, with most of the increase coming from the additional expense of acquired Bank Mutual facilities. Occupancy expense was down slightly from the prior quarter.

Acquisition related costs decreased $13 million from the prior quarter.

Taxes

The second quarter 2018 effective tax rate was 14% compared to 26% in the year ago quarter. The decrease is primarily due to the Tax Cut and Jobs Act (TCJA) signed into law on December 22, 2017. In the second quarter, the Company received one-time tax benefits from implementing tax planning strategies to maximize the positive impact of the TCJA. Going forward, the Company expects its quarterly effective tax rate to be approximately 22% for the remainder of 2018, and approximately 20% for the full year.

Credit

The second quarter provision for credit losses was $4 million, down from $12 million in the year ago quarter, but up from zero in the prior quarter, primarily due to loan growth.

With respect to second quarter 2018 credit quality:

Potential problem loans of $242 million were down $21 million from the year ago quarter and were down $41 million from the prior quarter.

Nonaccrual loans of $204 million were down $27 million from the year ago quarter and were down $4 million from the prior quarter. The nonaccrual loans to total loans ratio was 0.89% in the second quarter, compared to 1.12% in the year ago quarter, and 0.91% in the prior quarter.

Net charge offs of $8 million were down $4 million from the year ago quarter and were down $1 million from the prior quarter. Net oil and gas charge offs were $7 million in the second quarter.

The allowance for loan losses of $253 million was down $29 million from the year ago quarter and was down $4 million from the prior quarter. The allowance for loan losses to total loans ratio was 1.10% in the second quarter of 2018, compared to 1.35% in the year ago quarter, and 1.13% in the prior quarter.

The allowance related to the oil and gas portfolio was $17 million at June 30, 2018 and represented 2.5% of total oil and gas loans compared to 5.4% in the year ago quarter, and 2.9% in the prior quarter.

Capital

The Company's capital position remains strong, with a CET1 capital ratio of 10.5% at June 30, 2018. The Company's capital ratios continue to be in excess of the Basel III "well-capitalized" regulatory benchmarks on a fully phased in basis.

During the quarter, the Company repurchased approximately 250,000 shares, or $7 million, of common stock, at an average price of $26.52 per share.

SECOND QUARTER 2018 EARNINGS RELEASE CONFERENCE CALL

The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, July 19, 2018. Interested parties can access the live webcast of the call through the Investor Relations section of the Company's website, http://investor.associatedbank.com. Parties may also dial into the call at 877-407-8037 (domestic) or 201-689-8037 (international) and request the Associated Banc-Corp second quarter 2018 earnings call. The second quarter 2018 financial tables with an accompanying slide presentation will be available on the Company's website just prior to the call. An audio archive of the webcast will be available on the Company's website approximately fifteen minutes after the call is over.

ABOUT ASSOCIATED BANC-CORP

Associated Banc-Corp (NYSE: ASB) has total assets of $34 billion and is one of the top 50 publicly traded U.S. bank holding companies. Headquartered in Green Bay, Wisconsin, Associated is a leading Midwest banking franchise, offering a full range of financial products and services from more than 230 banking locations serving more than 110 communities throughout Wisconsin, Illinois and Minnesota, and commercial financial services in Indiana, Michigan, Missouri, Ohio and Texas. Associated Bank, N.A. is an Equal Housing Lender, Equal Opportunity Lender and Member FDIC. More information about Associated Banc-Corp is available at www.associatedbank.com.

FORWARD-LOOKING STATEMENTS

Statements made in this document which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management's plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Such forward-looking statements may be identified by the use of words such as "believe," "expect," "anticipate," "plan," "estimate," "should," "will," "intend," "outlook," or similar expressions. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements. Factors which may cause actual results to differ materially from those contained in such forward-looking statements include those identified in the Company's most recent Form 10-K and subsequent SEC filings. Such factors are incorporated herein by reference.

NON-GAAP FINANCIAL MEASURESThis press release and related materials may contain references to measures which are not defined in generally accepted accounting principles ("GAAP"). Information concerning these non-GAAP financial measures can be found in the financial tables. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide a greater understanding of ongoing operations and enhance comparability of results with prior periods.

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